Economic Calendar for week 24th - 28th December 2007

All times GMT

Monday Dec 24th:

Christmas Eve:

New York Stock Exchange closes early 18:00 GMT/ 13:00 ET.
Euronext/ French CAC closes early 13:00 GMT/ 14:00 ET.
Deutsche Borse/ German Dax closed.

Tuesday Dec 25th:

Christmas Day:

New York Stock Exchange Closed.
London Stock Exchange Closed.
Euronext/ French CAC Closed.
Deutsche Borse/ German Dax Closed.

Wednesday Dec 26th:

Boxing Day:

London Stock Exchange Closed.
Euronext/ French CAC Closed.
Deutsche Borse/ German Dax Closed.

US - 14:00 - National HPI Composite-20 Y/Y.
US - 15:00 - Richmond Fed Index.

Thursday Dec 27th:

UK - 09:30 - Housing Equity Withdrawal Q/Q.
UK - 09:30 - BBA Mortgage Approvals.
US - 13:30 - Durable Goods Orders M/M.
US - 13:30 - Core Durable Goods Orders M/M.
US - 13:30 - Unemployment Claims.
US - 15:00 - Consumer Confidence.
US - 15:30 - Crude Oil Inventories.

Friday Dec 28th:

UK - 07:00 - Nationwide House Prices M/M.
EU - 09:00 - Retail PMI.
US - 15:00 - New Home Sales.

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany

The week ahead.

Tricky would be a choice word to describe global equity throughout the second half of this year. Stock markets and economies appear to be balancing on a knife edge with the chances of a global recession as high as 50/50 according to some analysts.

The credit crisis, interest rates, inflation, government debt and consumer spending are all interconnected and will form the focus for 2008. Last week, global stock markets closed a jittery week strongly with sentiment swinging around the news flow of these five factors. On Thursday, the Nasdaq 100 closed up over 2% on better than expected consumer spending numbers and earnings reports from Research In Motion (Blackberry) and Oracle Corp.

The FTSE was one of the strongest markets last week on news that the last interest rate cut was voted for unanimously. This may increase the chances of a series of further rate cuts, with the next cut expected to come as soon as January 10th.The MPC said that a substantial loosening of policy might be needed to head off the risks to economic growth from the credit squeeze.

Sterling plummeted to its lowest levels for three months against the dollar and to near its all time low against the Euro. UK shoppers hopping over to New York for Christmas shopping will have had much less of a bargain than hoped as the USD/ GBP exchange rate dropped below $2 to the pound on Thursday.

A dramatic surge in Government Borrowing also affected sentiment as data from the Office of National Statistics showed that the UKs current account deficit had doubled in the third quarter to �20bn. This is now the biggest deficit in cash terms, at 5.7% of GDP and is now bigger than the US deficit comparatively.

However a rate cut in January isnt a done deal with inflation fears persisting. A no change verdict is most likely at the next meeting, according to many senior economists and interest rate futures. Libor (London Inter Bank Lending Rate) fell last week on the back of the global central bank rescue plan. It is hoped that the easing of this rate means that credit markets will begin to flow again in the New Year without the need for another rate cut.

There is much talk of the Santa Clause rally coming into effect between the close on Christmas Eve and New Years Eve. Since 1940 the S&P 500 has been up during this period 76% of the time with an average gain of 0.8%. The effect has diminished in recent years according to Bespoke Investments with the S&P 500 actually posting a decline on average during the festive period since the start of the current bull market in 2003.

According to the Stock Traders Almanac when the rally doesnt appear, it can be bad news for the stock market. If Santa Clause should fail to call; bears may come to Broad Wall as they put it. This was certainly on the mark back in 2000.

Next week there is a reduced Christmas trading calendar. Most notable are US core durable goods orders & consumer confidence on Thursday. On Friday, house price sentiment will again dominate with the UKs Nationwide house price data and US new home sales released at the end of the week.

Thursday and Fridays strength was impressive, but it could be argued that the rally from Tuesday was too far too fast. We are entering a seasonably positive period, but the speed of Fridays rally may have exhausted the bulls enthusiasm earlier than expected.

Therefore a no touch higher may be the better option for the Christmas week and beyond. This allows for some minor further upside while providing exposure to churning market over the next month. A No Touch higher on the S&P 500 with the trigger set to 1590 over 35 days returns a yield of 10%. This level is 14 points higher than the all time high posted in October.

David Evans

Fuel Standards Will Force Lighter Autos

Higher Fuel Standards Will Force Automakers to Lighten Up With Less Steel, More Aluminum

The energy bill President Bush signed last week mandating tougher fuel-economy standards sent a simple message to automakers: lighten up.

The new rules certainly give makers of aluminum, carbon fiber and other lightweight materials something to smile about, analysts say, though the steel industry's piece of the auto-industry pie is likely to shrink.

Auto shoppers, meanwhile, can expect to pay a premium at dealerships when the new rules kick-in -- but the impact will be mitigated somewhat by fuel savings.

The new law says the auto industry must raise its fleet-wide fuel-economy average 40 percent in the U.S., to 35 miles per gallon, by 2020. Increased mileage requirements could begin as early as 2011.

"With new standards, historically the auto industry has responded by lowering the weight, which meant less steel and more aluminum, rubber and plastic," said Mary Deily, a professor of economics at Lehigh University in Bethlehem, Pa., who has studied the steel industry.

A 10 percent drop in weight yields roughly a 6 percent improvement in fuel economy, automakers and analysts said.

In order to fully achieve the energy bill's fuel-economy goals, however, automakers are looking at enhanced engine and transmission efficiency -- which already can be found in gas-electric hybrid vehicles -- reduced tire resistance and improved aerodynamics, says Alan Taub, executive director of research and development at General Motors Corp.

"The question is how to deliver this fuel economy with the best combination of technologies to deliver the highest value to customers," Taub said.

Today, steel accounts for about 60 percent of an average vehicle's weight in the U.S., down from a generation ago when much more of the metal was used, executives and analysts said. Still, the popularity of trucks, minivans and SUVs has caused the average vehicle weight to rise by more than 25 percent, to about 4,100 pounds, over the past 20 years, helping steel providers.

Even so, the percentage of aluminum in cars has been on the rise for decades since the last boost in fuel economy standards. Alcoa Inc., the country's largest aluminum maker, sees an even greater opportunity ahead.

Hexcel Corp., Zoltek Cos. and other carbon fiber makers also stand to benefit from tougher fuel-economy rules. Their lightweight composite materials, which are significantly more expensive than steel, already are used in some Mercedes, BMW and Audi vehicles and in GM's new Corvette, as well as in the aerospace industry, which is looking to drive down its jet-fuel expenditures.

As aluminum and carbon fiber replace some steel, there will be a "fairly serious cost impact" for consumers, said Larry Rinek, a senior automotive consultant with Frost & Sullivan.

Alcoa spokesman Kevin Lowery said aluminum costs will drop over time as automakers get Alcoa and other metal producers involved earlier in the production process, in order to reduce waste.

Zoltek, Hexcel and other carbon-fiber makers already are ramping up production to meet an anticipated surge in demand. But the mainstreaming of carbon fiber as a car-building material depends on prices coming down, and that can only occur with mass-production, said Brian Yerger, an alternative energy analyst at Jesup & Lamont Securities Corp.

While Europe favors small cars, manual transmissions and diesel engines to offset high fuel prices, U.S. automakers believe they can make cars lighter, and more energy efficient, without sacrificing size.

For example, Ford Motor Co. last month said state-of-the-art engines and power-steering systems will help it meet a portion the fuel efficiency mandates, and that greater use of aluminum and high-strength steel could help shed 250 pounds to 750 pounds per vehicle.

Still, the tiny market for hybrids in the U.S. is growing at a rapid clip. In November, sales of Toyota's Prius, the most popular hybrid in the U.S., jumped 109 percent, compared with a 5 percent drop in sales of trucks and sport utility vehicles.

The American Iron and Steel Institute, whose members include Nucor Corp. and United States Steel Corp., said the fastest growing material being built into new vehicles is advanced high-strength steel, which was developed to help automakers meet current fuel economy standards without compromising safety. It is more expensive than traditional low-carbon steel, but lighter -- and not as costly as aluminum or carbon fiber.

The transition to high-strength steel started 10 years ago and today is "cost neutral," Taub said, because automakers can use less of the material per vehicle for an overall 25 percent reduction in weight. Using a similar amount of aluminum provides up to a 45 percent weight reduction, compared with a decade ago, while magnesium and carbon fiber offer weight drops of up to 60 percent -- but carry significantly higher costs.

About one-fifth of domestic steel shipments currently go to U.S. automakers, and even if that figure shrinks, steel industry profits will be buffered by the higher prices paid for the high-strength metal.

High-strength steel will remain the dominant car material for quite some time, Taub said, "but you'll see a greater proliferation of other materials.

Unpaid Credit Cards Bedevil Americans

Americans' See Their Debt Woes Expand As Unpaid Credit Card Bills Are on Rise

Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

"Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."

The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart.

At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.

Serious delinquencies also are up sharply: Some of the nation's biggest lenders -- including Advanta, GE Money Bank and HSBC -- reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.

The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors -- similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.

Until recently, credit card default rates had been running close to record lows, providing one of the few profit growth areas for the nation's banks, which continue to flood Americans' mailboxes with billions of letters monthly offering easy sign-ups for new plastic.

Even after the recent spike in bad loans, the credit card business is still quite lucrative, thanks to interest rates that can run as high as 36 percent, plus late fees and other penalties.

But what is coming into sharper focus from the detailed monthly SEC filings from the trusts is a snapshot of the worrisome state of Americans' ability to juggle growing and expensive credit card debt.

The trend carried into November. As of Friday, all of the trusts that filed reports for the month show increases in both delinquencies and defaults over November 2006, and many show sequential increases from October.

Discover accounts 30 days or more delinquent jumped 25,716 from November 2006 and had increased 6,000 between October and November this year.

Many economists expect delinquencies and defaults to rise further after the holiday shopping season.

Mark Zandi, chief economist and co-founder of Moody's Economy.com Inc., cited mounting mortgage problems that began after this summer's subprime financial shock as one of the culprits, as well as a weakening job market in the Midwest, South and parts of the West, where real-estate markets have been particularly hard hit.

"Credit card quality will continue to erode throughout next year," Zandi said.

Economists also cite America's long-standing attitude that debt -- even high-interest credit card debt -- is not a big deal.

"The desires of consumers to want, want, want, spend, spend, spend -- it's the fabric of our nation," said Howard Dvorkin, founder of Consolidated Credit Counseling Services in Fort Lauderdale, Fla., which has advised more than 5 million people in debt. "But you always have to pay the piper, and that can be a very painful process."

Filing for bankruptcy is no longer a solution for many Americans because of a 2005 change to federal law that made it harder to walk away from debt. Those with above-average incomes are barred from declaring Chapter 7 -- where debts can be wiped out entirely -- except under special circumstances and must instead file a repayment plan under the more restrictive Chapter 13.

Personal finance coaches say the problem is most grave for individuals who are months delinquent or already in default -- like Kenneth McGuinness, a postal clerk from Flushing, N.Y.

His credit card struggles began nine years ago, when he charged his son's college tuition and books. He thought he was being clever: His credit card's 6 percent "teaser" interest rate was lower than the 8.6 percent interest on a college loan.

McGuinness, 61, soon began using Citibank and Chase cards for food, dental work and copays on doctor visits and minor surgeries. Interest rates surged to 30 percent. Now he's $37,000 in debt and plans to file for bankruptcy in February.

"I tried to pay what I could and go after the high-interest accounts first," McGuinness said. "But it just kept getting higher and higher, and with late charges and surcharges I was going backward."

In the wake of the jump in defaults on subprime mortgage loans made to borrowers with poor credit histories, banks have been less willing to allow consumers to consolidate credit card debt into home equity loans or refinanced mortgages. That is leaving some with no option but to miss payments, economists said.

Investors also are backing away from buying securitized credit-card debt, said Moshe Orenbuch, managing director at Credit Suisse. But that probably has more to do with concerns about the overall health of the U.S. economy, he said.

"It's been getting tougher to finance any kind of structured finance -- mortgages, automobile loans, credit cards, student loans," said Orenbuch, who specializes in the credit industry.

Capital One Financial Corp. reported that delinquencies and defaults are highest in regions where troubled mortgages are concentrated, including California and Florida.

Among the trusts examined, Bank of America Corp. had the highest delinquency volume, with overdue accounts valued at $5 billion. Bank of America defaults in October were almost 200 percent higher than in October 2006.

A spokesman for Charlotte, N.C.-based Bank of America declined to comment.

Other trusts -- including those linked to Capital One, American Express Co., Discover Financial Services Co. and those containing "branded" cards from Wal-Mart Stores Inc., Home Depot Inc., Lowe's Companies Inc., Target Corp. and Circuit City Stores Inc. -- also reported striking increases in year-over-year delinquency and default rates for October. Most banks and other financial institutions holding credit card debt on their own books also reported double-digit increases in delinquencies.

The one exception in October was JPMorgan Chase & Co.'s credit card trust, which reported declines in both delinquencies and defaults. A Chase spokesperson attributed this to its focus on prime borrowers and aggressive account management.

By contrast, Capital One executives told analysts last month that the company projected 2008 write-offs of credit card debt to be at least $4.9 billion. This projection, analysts were told, took into account growing delinquencies and potential effects if the housing market continued its downward slide.

Capital One spokeswoman Julie Rakes said the increase in delinquencies could be due to an accounting change last summer, which shortened the grace period between when statements were issued and the due date.

Capital One also reported that the number of accounts 90 days or more in arrears had increased between October and November. More than 1.2 million of Capital One's 30 million accounts were either delinquent or in default.

Many personal financial coaches expect this trend to accelerate in 2008 -- particularly among people who took out untraditional loans whose interest rate has risen, requiring owners to pay mortgages several hundred dollars more than just a year ago.

"You're looking at more and more distress -- consumers desperately trying to preserve their credit lines, but there's nowhere else to go," said Robert Manning, director of the Center for Consumer Financial Services at Rochester Institute of Technology. "It's like a game of dominoes."

Economic Calendar for week 17th - 21st December 2007

All times GMT

Monday Dec17th:

UK - 00:01 - Rightmove House Price Index M/M.
EU - 09:00 - Manufacturing PMI.
EU - 09:00 - Services PMI.
US - 13:30 - Empire State Business Conditions Index.
US - 13:30 - Current Account.
US - 14:00 - TIC Net Long-Term Transactions.
UK - 15:00 - Fed Governors Hold Open Meeting.
UK - 18:00 - NAHB Housing Market Index.

Tuesday Dec 18th:

UK - 09:30 - CPI & Core CPI Y/Y.
UK - 09:30 - RPI Y/Y.
EU - 10:00 - Trade Balance.
UK - 10:45 - BOE Governor King Speaks.
US - 13:30 - Housing Starts.
US - 13:30 - Building Permits.

Wednesday Dec 19th:

GE - 07:00 - PPI M/M.
GE - 09:00 - ifo Business Climate Index & Business Expectations Index.
EU - 09:00 - ECB President Trichet Speaks.
UK - 09:30 - MPC Meeting Minutes.
UK - 09:30 - Business Investment Q/Q.
UK - 11:00 - CBI Distributive Trades Realised
US - 15:30 - Crude Oil Inventories

Thursday Dec 20th:

GE - 07:00 - Consumer Confidence.
UK - 09:30 - GDP Q/Q.
UK - 09:30 - Current Account.
UK - 09:30 - M4 Money Supply M/M.
UK - 09:30 - Public Sector Net Borrowing.
UK - 09:30 - BSA Mortgage Approvals.
US - 13:30 - GDP Annualised & GDP Annualised Deflator Q/Q.
US - 13:30 - Unemployment Claims.
US - 15:00 - Leading Index M/M.
US - 17:00 - Philadelphia Fed Manufacturing Index.

Friday Dec 21st:

GE - 07:00 - Import Price Index M/M.
FR - 07:50 - Consumer Spending M/M.
EU - 09:00 - Current Account.
UK - 09:30 - Retail Sales M/M.
UK - 09:30 - Index of Services Q/Q.
EU - 10:00 - Industrial New Orders M/M.
US - 13:30 - Core PCE Price Index M/M.
US - 13:30 - Personal Spending M/M.
US - 13:30 - Personal Income M/M.
US - 15:00 - Consumer Sentiment.

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany

The week ahead.

To say that Wall Street has been paying close attention to the actions of the US Federal Reserve recently is an understatement to say the least. Last week was no different as the Dow Jones & Co reacted frantically to Fed attempts to stoke greater movement in moribund credit markets.

Last weeks mixed economic readings came in a week already made busy by the Fed's decision on Tuesday to lower interest rates for the third time this year, and its part a day later in the coordinated global liquidity rescue plan. Investors have since been debating the effectiveness of such measures.

In one unwelcome development, prices of gasoline at wholesale level jumped 3.2 percent in November, the biggest increase in 34 years. But the news was not all bad last week. The Commerce Department said retail sales rose in November by the largest amount in six months, and a Labor Department report showed a drop in new claims filed by those seeking jobless benefits.

The modest movement came as investors further examined the Fed's agreement with the European Central Bank and the central banks of England, Canada and Switzerland, to combat what it described as elevated pressures in the credit markets.

The market's back and forth trading of the last couple of weeks, is likely to have kept some uneasy investors out of action, not likely to return until after the New Year.

Next week we have yet another look into the US housing market, which hasnt shown any hints of improving anytime soon. Maybe the new bailout plan, which will be freezing the mortgage rates for some of those exotic mortgages for the next 5 years, will help out some people, but its unlikely to be shown in next weeks readings.

Also next week is the final reading of the GDP and inflation. Both are potential market movers, as in the last few months rate cuts could have pushed up inflation, therefore hurting consumers and their take home pay.

For a trade this week it may be advantageous to look at a potential increase in volatility in the markets, due to the fact that most traders are going away for vacation, thus creating an overreaction for any major move.

An up or down bet on the S&P 500 with an 18 days to maturity, and 45 points away from the spot on either side, pays a potential 9% ROI. This means that the market has to move 45 points in either direction from Mondays open for you to win.

Arthur Smelyansky

Stocks Erase Sharp Gains Sparked by Fed

Stocks Give Up Sharp Gains on Fed Plan to Work With Other Central Banks on Credit Problems

NEW YORK -- Wall Street closed only moderately higher in an erratic session Wednesday as investors remained unconvinced by a Federal Reserve plan to work with other central banks to alleviate the global credit crisis.

Investors erased a 272-point gain in the Dow Jones industrial average that followed the Fed's announcement of an agreement with the European Central Bank and the central banks of England, Canada and Switzerland to confront what it called elevated pressures in the credit markets. The Fed said it will create a temporary auction facility to make funds available to banks and set up lines of credit with the European and Swiss central banks for additional resources.

This move is the biggest concerted liquidity injection since the aftermath of the 2001 terrorist attacks and helped boost investor sentiment a day after the Fed disappointed Wall Street with a quarter-point cut in interest rates. Many investors had hoped for a half-point reduction to help the economy weather the credit and mortgage crises.

But the Fed's latest salvo didn't appear to assuage Wall Street's concerns about the spike in bad debt that has caused the credit markets to tighten in recent months, nor did it sew up investors' concerns about the nation's economic health.

"There's still no certainty that we're out of the woods ... there's still a risk for recession," said Steven Goldman, chief market strategist at Weeden & Co. "We did get very positive news from the Fed and other banks chipping in to add liquidity into the system. But, the environment hasn't fundamentally changed that the worst is over for the financial system."

He pointed out that the biggest beneficiaries during a period of rate cuts are bank and brokerage stocks. However, the sector was under pressure Wednesday as investors worried the institutions will take further writedowns after warnings from Bank of America Corp., Wachovia Corp. and PNC Financial Services Group Inc.

The Dow rose 41.13, or 0.31 percent, to 13,473.90. The blue-chip index had risen as much as 271.75 in early trading; and was down by as much as 111 points.

Broader stock indicators were also higher. The Standard & Poor's 500 index rose 8.94, or 0.61 percent, to 1,486.59. The Nasdaq composite index rose 18.79, or 0.71 percent, to 2,671.14.

Tuesday's stock plunge of 294 points had interrupted Wall Street's attempt at an end-of-the-year rally, but Wednesday's performance brought the possibility of a market recovery back to the table. The Dow is up more than 6 percent since falling as low as 12,724.09 on Nov. 26.

But analysts were still enthusiastic about the Fed's action on Wednesday.

"I think it's certainly a strong measure to ease this credit crunch, and I think it will encourage banks to use the discounted borrowing. If banks won't lend to each other, then at least the central banks will lend to them," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

The plan sent Treasury prices falling, because the prospect of more available credit lessened investors' need for the safe haven that government securities provide. The 10-year Treasury note's yield, which moves opposite the price, rose to 4.08 percent from 3.97 percent late Tuesday and then rose to 4.09 percent in after-hours trading.

The dollar was mixed against other major currencies. Gold prices rose.

Investors also digested economic data. The Commerce Department said the U.S. trade deficit rose in October to the loftiest level in three months, driven by record-high oil prices and an influx of Chinese imports. It also reported that November import prices surged.

If inflation accelerates, it could keep the Fed from lowering rates again.

Energy prices soared after the government reported surprising declines in U.S. stockpiles of crude oil, and surged even further after reports of a fire at an ExxonMobil Corp. refinery in Texas. A barrel of light sweet crude jumped $4.37 to $94.39 a barrel on the New York Mercantile Exchange.

ExxonMobil shares rose $1.64 to $91.92.

In other corporate news, Wachovia doubled its estimate of loan loss provisions to about $1 billion for the fourth quarter, while BofA pointed to higher writedowns and said he expects current credit market turbulence to extend into 2008. PNC said the money it will set aside to cover bad loans for the last three months of the year will be more than twice as large as in the third quarter.

Wachovia fell $3.38 to $40.53, while Bank of America dropped $1.22, or 2.7 percent, to $43.43. PNC fell $3.55, or 2.5 percent, to $68.24.

SLM Corp., the student loan company known as Sallie Mae, slashed its 2008 earnings due to the costs of replacing an interim funding facility. The company also disclosed it failed to renegotiate a buyout with an investor group that balked several months ago at its original $25 billion cash offer.

SLM fell $3.45, or 10.8 percent, to $28.49.

But AT&T Inc. climbed for the second straight session after the telecom carrier issued solid guidance and lifted its dividend. AT&T was the biggest gainer among the 30 Dow companies, rising $2.25, or 5.7 percent, to $41.71.

The Russell 2000 index rose 5.44, or 0.71 percent, to 771.71.

Advancing issues led decliners by a 4 to 3 basis on the New York Stock Exchange. Consolidated volume came to 4.25 billion shares, compared to 3.97 billion on Tuesday.

Overseas, Japan's Nikkei stock average closed down 0.70 percent, while Hong Kong's Hang Seng index closed down 2.41 percent. Britain's FTSE 100 rose 0.35 percent, Germany's DAX index added 0.83 percent, and France's CAC-40 advanced 0.32 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Weekly Briefing 10th - 14th December 2007

All times GMT

Monday Dec10th:

UK - 00:01 - Rightmove House Price Index M/M.
GE - 07:00 - Trade Balance.
GE - 07:00 - Current Account.
FR - 07:45 - Industrial Production M/M.
UK - 09:30 - PPI Input & PPI Output M/M.
US - 15:00 - Pending Home Sales M/M.
UK - 15:30 - Leading Index M/M.

Tuesday Dec 11th:

UK - 09:30 - Trade Balance.
GE - 10:00 - ZEW Economic Sentiment.
EU - 10:00 - ZEW Economic Sentiment.
US - 15:00 - Wholesale Inventories M/M.
US - 19:15 - Interest Rate Statement & Discount Rate Decision.

Wednesday Dec 12th:

UK - 09:30 - Average Earnings Index +Bonus Q/Y.
UK - 09:30 - Claimant Count Change.
UK - 09:30 - Unemployment Rate.
EU - 10:00 - Industrial Production M/M.
US - 13:30 - Trade Balance.
US - 13:30 - Import Price Index M/M.
US - 15:30 - Crude Oil Inventories

Thursday Dec 13th:

UK - 00:01 - RICS House Price Balance.
FR - 07:45 - Nonfarm Employment M/M.
FR - 07:45 - CPI M/M.
EU - 09:00 - ECB Monthly Bulletin.
UK - 11:00 - CBI Industrial Trends Orders.
US - 13:30 - Retail Sales & Core Retails Sales M/M.
US - 13:30 - PPI & Core PPI M/M.
US - 13:30 - Unemployment Claims.
US - 15:00 - Business Inventories M/M.

Friday Dec 14th:

GE - 07:00 - CPI M/M.
EU - 10:00 - CPI M/M.
US - 13:30 - CPI & Core CPI M/M.
US - 14:15 - Industrial Production M/M.
US - 14:15 - Capacity Utilization Rate

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany

The week ahead.

Housing news and interest rate decisions dominated headlines and market sentiment yet again last week. Its easy to forget that there were times when this wasnt the case.

Fear had free rein in the final quarter of 2007, as concerns over an all out collapse in the housing market, banking sector, and consumer spending drove the market lower. As the final month of the year approached, sentiment has changed quickly in lock step, with forward expectations for US interest rates.

Fed Futures markets are indicating that a quarter point cut is highly likely at this weeks FOMC meeting, but it is the chance of a half point cut that has got the market excited.

Last week, the UKs MPC cut rates by a quarter of a percent, halting an 18-month firming cycle. Many economists didnt predict the move, though there was a remarkably rapid change in sentiment in the days leading up to the announcement. Sterling traders certainly knew something was afoot, with the US Dollar/GBP exchange rate dropping 1.5% at one stage, the day before the cut was announced.

The FTSE rose rapidly going into the decision, but fell back sharply on the actual news. It seemed a classic case of buying the rumour, and selling the news. The cut will be welcome news for borrowers, as the housing market in the UK continues to show signs that it will go the same way as the US.

Sentiment is also becoming more positive for the banking sector, as banks produce better than expected results, and smaller than expected credit related write downs. Britains Royal Bank of Scotland announced that the amount it would be writing down is roughly half the amount analysts had estimated. In addition they said that 2007 profits should still be well ahead of expectations.

Seasonality may be playing its part with December being a good month traditionally. According to The Stock Traders Almanac, since 1950 when the Dow was down in November, it gains an average of 4.9% over the next two months. In fact, only twice has the December-January period been down following a negative November; in 1967 and 1969. December and January are seasonably very positive months in their own right, with the S&P 500 up 75% and 65% of the time respectively.

For data release, this week is as heavy as they come, with the aforementioned US interest rate statement on Tuesday. A quarter point cut is most likely, but with a 20% chance of a half point cut, the reaction could be volatile to say the least.

In addition to announcing the next level of interest rates, the Fed will also be releasing their decision on the discount rate. This is the interest rate that banks can borrow from the FOMC. Many analysts are expecting this to be cut by twice as much as the headline interest rate, which would be good news for US banks.

This week there is also US pending home sales on Monday, trade balance on Wednesday, Core retail sales on Thursday, and Core CPI on Friday. With a top tier US economic announcement every day this week, its unlikely to be quiet on the US markets.

An up or down trade is a volatility trade that returns profits if either of two points are breached. An up or down trade on the S&P 500 over 10 days with the two triggers set as 1460 and 1545 returns 9%.

Dow Jones in Final Days Before Murdoch

Wall Street Journal Is Down to Finals Days Before Rupert Murdoch and Lieutenants Take Over

NEW YORK -- By the end of this week, the world's best-known chronicle of capitalism, The Wall Street Journal, will be owned by another company -- something many thought would never happen.

For more than a century, the Journal's parent company, Dow Jones & Co., was controlled by the Bancroft family, descendants of Clarence Barron, one of the earliest owners of the storied financial publishing company.

The family was long seen as unified in opposition to selling and at first rebuffed the extremely rich offer from Rupert Murdoch's News Corp., which valued the company at more than $5 billion, well above where Dow Jones stock was trading.

In the end, Murdoch won over enough family members to acquire Dow Jones and its flagship paper. News Corp. formally seals the deal with a vote by Dow Jones shareholders Thursday, but the outcome is assured since enough of the Bancrofts have entered binding commitments of support.

The deal should close quickly because it has already received the necessary regulatory approvals.

Guessing how the sale will affect the paper has been Topic A in the U.S. publishing industry since Aug. 1, when the agreement was announced.

The first inklings came late last week, when News Corp. appointed a new management team for Dow Jones, including longtime News Corp. publishing executive Les Hinton as CEO and Robert Thomson, editor of the Murdoch-owned Times of London, as publisher.

News Corp. declined to make its executives available for interviews, but outgoing Dow Jones CEO Richard Zannino said Murdoch and his News Corp. team were sure to bring a healthy appetite for risk to Dow Jones.

"The culture at News Corp. is one of partnering and taking prudent business risks, and they have a balance sheet to fund investment," Zannino said in an interview.

Murdoch's record of successful risk-taking is clear. His Fox News Channel eventually took over CNN in the ratings war among all-news cable networks, he just launched a Fox-branded business news network, and the $580 million News Corp. paid in 2005 for the online hangout MySpace, well before social networks became the Internet's hottest trend, turned out to be a bargain.

One of the most respected publications in the world, the Journal also is part of a company that many saw as having made a number of key missteps, including ceding ground to Reuters Group PLC and Bloomberg LP in the electronic delivery of news and financial data.

The Journal has gone through many changes in recent years, adding color and lifestyle coverage, moving to a narrower format, launching a Saturday edition and building its Web site into the most successful paid destination of any newspaper. But far more change is sure to come.

At The Times of London, Murdoch and his lieutenants took another risk in moving the paper from a broadsheet to a "compact" or tabloid format, which many readers say they find easier to hold and read.

Thomson took over as editor of The Times in 2002, and the paper has outsold its competitors on the newsstand consistently over the past three years, News Corp. said. Prior to that, Thomson was editor of the U.S. edition of the Financial Times, where he went up against the Journal.

John Andrews, a longtime British journalist who worked at The Economist for 24 years and now is a consulting editor there, said that Thomson has "tightened" The Times and that its move to the smaller format has been a commercial success.

"The Times was in danger of losing a lot of its authority" at the time Thomson took over, Andrews said. "It hasn't regained the authority it had in its glory days, but it's been a better paper under Robert Thomson's leadership."

As Murdoch announced the new Dow Jones leadership, he also clarified the line of succession at News Corp., naming his 34-year-old son James to a new senior role overseeing the media conglomerate's operations in Asia and Europe, putting him clearly in line to succeed his father, who is 76.

The younger Murdoch will also rejoin News Corp.'s board and relinquish his post as CEO of British Sky Broadcasting Group PLC, a satellite TV company in which News Corp. owns a 39 percent stake.

Even before the official hand-over to News Corp., Dow Jones has been moving to further transform itself and lessen its reliance on traditional newspaper advertising, which is widely seen as a threatened revenue source as ad dollars move to the Internet.

In late November, Dow Jones said it would expand the launch of a glossy lifestyle magazine called Pursuits to make it a global publication. It also said it would complete its exit from the community newspaper business. Jim Ottaway Jr., whose family founded that business and sold it to Dow Jones, opposed selling to Murdoch and says he still plans to vote his family's 7 percent stake against the deal.

Murdoch has given some general indications about his plans for the Journal but has declined to go into detail. He has said that he wants to greatly expand the paper's Washington and national coverage in order to compete more aggressively against The New York Times and that he wants to expand the Journal's operations online.

Murdoch also plans to expand overseas, particularly in Asia and Europe, where the Journal can go up against Pearson PLC's Financial Times.

Murdoch's investments in Dow Jones comes at a time of general contraction in the newspaper business as readers and advertisers flock to a variety of information sources on the Internet.

Lou Ureneck, a chair of the journalism department at Boston University, said depressed newspaper stock prices and general malaise about the industry's future gave Murdoch an opening.

"I don't think this sale would have occurred 10 years ago," Ureneck said. "This is a window between a prosperous past and a likely prosperous future, and in that window Murdoch was able to gain this prize."

Fannie Cutting Dividend, Selling Stock

Fannie Mae Cutting Dividend 30 Percent, Selling $7 Billion in Preferred Stock to Raise Capital

WASHINGTON -- Mortgage finance giant Fannie Mae on Tuesday announced it was cutting its dividend 30 percent and selling $7 billion in special stock to raise additional capital.

The government-sponsored company said it was slicing its dividend to 35 cents a share, starting in the first quarter of next year, and issuing $7 billion in preferred stock this month to cushion against losses in lower-quality mortgages.

Fannie Mae, which finances or guarantees one of every five home loans in the United States, last month reported a third-quarter loss of $1.4 billion, while forecasting housing market woes through next year because of mounting home loan delinquencies.

The stock sale "will provide the company with additional capital to conservatively manage increased risk in the housing and credit markets, help meet its mission of providing affordability, liquidity and stability, and free up capital to pursue emerging growth opportunities," Fannie Mae said in a statement.

The action follows similar moves recently by Freddie Mac, its smaller government-sponsored rival in the $11 trillion home-mortgage market, which posted a $2 billion loss in the third quarter.

The company said Tuesday it believes the continuing turmoil in the housing and credit markets and anticipated further declines in home prices to "negatively affect" its financial condition and results next year.

Fannie Mae shares, already down $1.07 or nearly 3 percent in trading Tuesday, dropped to $33.88, losing $1.30, or 3.7 percent in after-hours trading. The company made the announcement after the close of trading.

"Fannie Mae has a responsibility to serve the mortgage market in good times and in times like these," the company's president and CEO, Daniel Mudd, said in a statement. "The steps ... are designed to enable us to meet that responsibility with a comprehensive, conservative plan to serve the market and manage our capital. The market needs us to be there -- and we believe this plan will help us do that."

The entire $7 billion in preferred stock to be sold will not be convertible into common stock, Washington-based Fannie Mae said. Converting stock into common stock dilutes the value of outstanding shares and could further depress stock prices.

Typically, preferred stock pays a higher dividend than common stock and carries a stronger claim on the assets of a company if it goes into bankruptcy.

Robust investor demand emerged last week for Freddie Mac's $6 billion offering of preferred stock, also nonconvertible, at $25 a share. The offering, said by the company to be five times oversubscribed, has been closely watched by investors gauging the extent of the housing market's turbulence.

Fannie Mae said improved capital market conditions prompted the stock sale this month, citing "large transactions with relatively attractive terms." It did not name those transactions.

Lenders, investors and consumers likely will keep a watchful eye on the financial health of Fannie Mae and Freddie Mac, which both posted staggering third-quarter losses as they were returning to normalcy following multibillion-dollar accounting scandals several years ago.

By buying up mortgages they make and then bundling them as securities for sale to investors, the two companies traditionally have been a major source of funding for banks and other mortgage lenders. Industry experts say a reduced role by either could ripple across the housing market.

Fannie Mae's stock offering is being managed by Lehman Brothers Holdings Inc. and Merrill Lynch & Co.

Fannie Mae: http://www.fanniemae.com

Freddie Mac: http://www.freddiemac.com

Ford, Toyota US Sales Flat; GM Down

GM, Chrysler Down, Honda Up, Ford, Toyota Flat in Mixed US Sales

DETROIT (AP) -- Automakers reported mixed U.S. sales results for November on Monday, with some new or more fuel-efficient models performing well despite consumer malaise over high gas prices and the weak economy.

But even with rising sales of small cars and crossovers, the industry is predicting things will get worse in 2008. General Motors Corp. said Monday it is cutting scheduled first-quarter production by 11 percent, while Ford Motor Co. said it would cut scheduled production by 7 percent. Ford's top U.S. sales analyst, George Pipas, said the automaker is predicting sales will be at their slowest pace in a decade in the first half of 2008.

Shares of automakers fell. GM dropped $1.22, or 4 percent, to $28.61 in trading Monday, and Ford shares declined 26 cents, or 3.5 percent, to $7.25. Toyota shares fell $1.53, or 1.4 percent, to $110.92. Shares of Nissan declined 23 cents, or 1 percent, to $22.67, and Honda shares dropped 92 cents, or 2.7 percent, to $33.49.

November sales fell 2 percent industrywide in November, according to Autodata Corp. Car sales were up 6 percent but sales of trucks and sport utility vehicles fell 7 percent.

GM, the biggest automaker by U.S. sales, said its November sales dropped 11 percent, hurt by falling demand for trucks as well as cuts in sales to low-profit rental car fleets, while Chrysler LLC said sales fell 2 percent. Ford and Toyota Motor Corp. both reported flat sales for the month. Honda Motor Co.'s sales were up 5 percent while Nissan Motor Co.'s sales rose 6 percent.

"Rising fuel prices and sliding home values delivered a one-two punch this month," Jim Lentz, president of Toyota's U.S. sales arm, said in a statement. "But the industry's not down for the count. Demand for fresh, more fuel-efficient products continues to show strength."

GM's November truck sales fell 15 percent, a casualty of the slowing pace of new home construction, while car sales declined 4 percent. GM said it also cut sales to low-margin rental fleets by 29 percent compared with last November. GM's sales were down 6 percent for the first 11 months of the year.

Mark LaNeve, GM's vice president of North American sales, service and marketing, said GM wasn't competitive enough on its incentive spending for 2008 model year pickup trucks. He said the company wants to remain disciplined about incentives but could ramp up spending. Edmunds.com, the automotive information site, said GM spent an average of $3,136 per vehicle on incentives in November, lower than Ford and Chrysler but above its Asian rivals.

"We will make sure we vigorously defend our truck position," LaNeve said.

Ford's November results ended a yearlong string of losses. Every month of this year, Ford's sales compared badly to 2006, when it was still selling thousands of its old Taurus sedans to rental fleets. But Oct. 31 marked one year since the end of production of that sedan.

Ford's top U.S. sales analyst, George Pipas, said the automaker is on track to cut rental-fleet sales by 143,000 in 2007, or more than 30 percent. Ford cut rental-fleet sales by 6 percent in November and plans to continue cutting in 2008, Pipas said. Sales to more profitable government and commercial fleets were up 25 percent for the month.

Ford said its car sales fell 2 percent but truck sales rose 2 percent, largely on the strength of the Ford Escape small sport utility vehicle and Ford Edge crossover. Sales of the newly redesigned Ford Focus jumped 18 percent. Ford's sales dropped 12 percent for the first 11 months of the year.

Toyota continued its drive to overtake Ford this year as the No. 2 automaker by sales, outselling Ford by nearly 15,000 vehicles. Toyota's sales were flat for the month compared with last November, with a 4 percent increase in car sales -- including a 109 percent jump for the hybrid Prius -- offset by a 5 percent drop in sales of trucks and sport utility vehicles. Toyota's sales increased 4 percent for the year.

Chrysler's car sales shot up 41 percent, led by the new Sebring convertible as well as the Dodge Charger and Avenger. Those sedans helped lift Dodge's car sales by 75 percent for the month, Chrysler said. But Chrysler's truck sales were down 13 percent, and the company's sales were off 3 percent for the year.

Honda's car sales rocketed up nearly 20 percent on the strength of the new Accord sedan and the subcompact Fit, which saw sales double over last November. But the automaker's truck sales fell 11 percent. Honda's sales rose 3 percent for the first 11 months of the year.

Nissan said its sales rose largely on the strength of the new Rogue crossover and the Versa subcompact, which saw sales surge 67 percent. Nissan's car sales increased 11 percent, but truck sales were flat. Nissan's sales rose 6 percent for the January-November period.

The Associated Press reports unadjusted figures, calculating the percentage change in the total number of vehicles sold in one month compared with the same month a year earlier. Some automakers report percentages adjusted for sales days. There were 25 sales days last month and 25 in November 2006.

Ford Motor Co.: http://www.ford.com

General Motors Corp.: http://www.gm.com

Honda Motor Co., http://www.honda.com

Nissan Motor Co.: http://www.nissanusa.com

Toyota Motor Corp.: http://www.toyota.com

Weekly Briefing 3rd - 7th December 2007

PLEASE NOTE - All times GMT

Monday Dec 3rd:

GE - 08:55 - Manufacturing PMI.
EU - 09:00 - Manufacturing PMI.
UK - 09:30 - Manufacturing PMI.
EU - 10:00 - Unemployment Rate.
US - 15:00 - ISM Manufacturing Index & Prices.

Tuesday Dec 4th:

UK - 00:01 - BRC Retail Sales Monitor Y/Y.
UK - 09:30 - Construction PMI
EU - 10:00 - PPI M/M.

Wednesday Dec 5th:

UK - 00:01 - Consumer Confidence.
GE - 08:55 - Services PMI.
EU - 09:00 - Services PMI.
EU - 10:00 - Retail Sales M/M.
UK - 10:30 - BRC Shop Price Index Y/Y.
US - 13:15 - ADP Nonfarm Employment Change.
US - 13:30 - Nonfarm Productivity Q/Q.
US - 13:30 - Unit Labor Costs Q/Q.
US - 13:15 - ADP Nonfarm Employment Change.
US - 15:00 - ISM Non-Manufacturing Index.
US - 15:00 - ISM Non-Manufacturing Prices.
US - 15:30 - Crude Oil Inventories.

Thursday Dec 6th:

UK - 09:30 - Industrial Production M/M.
UK - 09:30 - Manufacturing Production M/M.
EU - 09:30 - Factory Orders M/M.
UK - 12:00 - Interest Rate Statement
EU - 12:45 - Interest Rate Announcement.
US - 13:30 - Unemployment Claims.
EU - 13:30 - ECB President Trichet Speaks.

Friday Dec 7th:

UK - 00:01 - NIESR GDP Estimate.
EU - 07:45 - Government Budget Balance.
GE - 10:00 - Industrial Production M/M.
EU - 11:00 - Composite Leading Indicators M/M.
US - 13:30 - Nonfarm Employment Change.
US - 13:30 - Unemployment Rate
US - 13:30 - Average Hourly Earnings M/M.
US - 15:00 - Consumer Sentiment.
US - 20:00 - Consumer Credit M/M.

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany

The week ahead.

Is market confidence here to stay ?

Last week world stock markets managed to recover somewhat from the mauling of most of November. On Tuesday and Wednesday alone the Dow Jones and S&P 500 put on 500 points and 60 points respectively. This puts the S&P 500 back in positive territory for the year heading into what is usually a benign festive trading period.
On the currency markets, the Dollar continued to strengthen against the Euro and the Japanese Yen. The Dollar index could be soon breaking its multi month down trend and move up from the 75 area. The US Dollar index is a measure of the Dollar against a basket of major currencies. This month it hit an all time low of $74.484, the lowest level since the gauge was initiated. This could be bad news for gold bugs and oil investors as the two commodities have been used as Dollar hedges.
The US housing market was again in focus last week, however the bad news is largely already priced in. In the UK though, it is arguable that the problems in the domestic housing market are not fully priced in yet and there may be worse news to come. Nationwide said the cost of an average home fell 0.8 percent this month, the first decline since February 2006 and the biggest drop since June 1995. Futures markets are pricing in a 10% decline over the next couple of years.

On the back of this, in their appearance before parliament last week, the MPC didnt rule out a December cut, which buoyed the market. However, a no change verdict is overwhelmingly the most likely decision next week. Retail prices rose in November at their fastest rate in nearly a year. This is due to retailers passing on the cost of rising supplies and accelerating consumer spending. King added, "We're trying to balance the risks to inflation with the downside risk if activity slows sharply. The committee's current judgment is that the most likely outcome is for output growth to slow and inflation to rise, at least for a period." Given his comments at the meeting, it seems that the MPC may stick to their primary mandate of controlling inflation. 2008 may be a different story.

Fed chairman Ben Bernanke said in a speech in Charlotte, North Carolina late on Thursday that the latest financial market developments "have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity". Officials must ``judge whether the outlook for the economy or the balance of risks has shifted materially.''

The Fed futures market was already pricing in a quarter point cut in the December FOMC meeting, but markets look to have taken this comment as making this more likely and a half point cut increasingly possible.

November is seasonably one of the best months on the US markets and usually marks the start of what is historically the best 6 months of the year for the stock market. This year has certainly bucked the trend with this November looking like it will be the worst November since 2000. However according to The Stock Traders Almanac Since 1950 when the Dow was down in November it gains an average of 4.9% over the next two months. In fact, only twice has the December-January period been down following a negative November; in 1967 and 1969.

Next week the aforementioned MPC interest rate statement and the ECB interest announcement are top of the list of market movers. Both Central banks are expected to announce no change verdicts, but as ever it is what is not said that will be of most interest to traders. ECB president Trichet speaks after the announcement. Other top tier announcements include Mondays US Manufacturing data and Fridays Non Farm Employment data.

In all, it will be a busy week for global stock and currency markets with so much data being released. The VIX options volatility index actually dropped below its short term moving averages last week which could be an indication of forthcoming volatility on a contrarian basis.

This coupled with the data heavy week next week, may make a volatility trade the best option. An up or down trade with the triggers set 35 points higher and 60 points lower than the current spot price of the S&P 500 returns 11% over 10 days. You may wish to leave this until later in the week to make the most of the time value, particularly with US Non Farm Employment data not released until Friday.

David Evans

Experts: Bailout Not Complete Solution

Treasury Plan to Rescue Home Loan Borrowers Not a Solution for All, Experts Say

WASHINGTON (AP) -- If lenders temporarily freeze low introductory interest rates on home loans made to risky borrowers before they soar, it would be a modest fix for the country's fractured housing market.

The problems are so far-reaching, analysts say, that an emerging Bush administration-backed plan -- nicknamed "teaser-freezer" by one economist -- won't spare many borrowers, or bankers, from the pain of escalating foreclosures and defaults.

Edward Yardeni, an economist who runs Yardeni Research in Great Neck, N.Y., called the plan "better than doing nothing," but added that it is "not necessarily going to make a big dent in the foreclosure problem that's facing us" because thousands of borrowers still might not be able to make their monthly payments.

As a result, the plan, which could be announced as soon as this week, is unlikely to quell worries that the housing market's ongoing problems will drag the economy into a recession.

Treasury Secretary Henry Paulson has been hashing out the plan's details with other top regulators, loan servicing companies and banks, including JPMorgan Chase & Co. and Wells Fargo & Co.

Some indications of the outlines of the proposal may come Monday morning, when Paulson is scheduled to speak at a housing forum in Washington.

As it stands, loan servicers are being asked -- but not mandated -- to give extensions of two to five years for subprime mortgages made to borrowers with weak credit that are due to reset at higher rates in the coming years.

The freezes would apply only for borrowers who are current on mortgage payments but unable to afford loans when they adjust to higher interest rates -- and sometimes dramatically higher monthly payments. The Federal Deposit Insurance Corp. estimates that 1.1 million borrowers are in that situation.

But for an estimated 400,000 borrowers already late on payments before loans reset at higher rates, "there may be no alternative except for foreclosure," Michael Krimminger, an FDIC special policy adviser, said last week at a congressional hearing.

Nevertheless, Krimminger said, borrowers who are current on their loan payments after two years are likely to be able to repay at that rate over the long run.

It isn't just the resetting of rates that's problematic. FDIC officials note that many subprime borrowers received starter rates that were not especially low at the time: typically around 7 percent to 9 percent, when rates as low as 5 percent were common for borrowers with strong credit.

The plan hatched by government and industry is also intended to benefit investors who purchased these risky mortgages. Agency officials counter criticism from investors concerned the plan will deny them potential profits by arguing they will be better off in the long run through the loan modifications. It spares them the cost of a foreclosure, which can run around $50,000, and decreases the likelihood of default.

"Lenders and investors will ultimately benefit," Sheila Bair, chairman of the Federal Deposit Insurance Corp., said in an October speech in which she unveiled the idea to investors. "You'll come out ahead of the game with a performing mortgage that's being paid versus having a loan that's in foreclosure."

Initially, investors gave a chilly reception to Bair's proposal. But since then, Democrats have been moving forward legislation -- ardently opposed by lenders -- to allow home mortgages on primary residences to be modified in bankruptcy court.

Worries that the bankruptcy proposal would gain further steam has made widespread loan modifications began to look more appealing to the mortgage industry, said Jaret Seiberg, a financial services policy analyst with Stanford Group.

Plus, "the industry realized how time-consuming and expensive it was to restructure these loans on a borrower-by-borrower basis," he said.

While the Treasury Department-organized effort won praise from Democrats last week, some experts said it would still face resistance from investors in complex securities backed by mortgage loans.

If the Treasury Department pushes modifications that are against the interest of investors, "there will definitely be lawsuits," said Mark Adelson, a mortgage securitization consultant.

During the sunny days of the housing boom, many buyers were banking on the prospect that they could refinance into more affordable loans as the value of their homes soared.

Now that home prices are dropping in large parts of the country, and broader economic conditions are worsening, those borrowers are likely to face trouble even with their introductory loan rates extended for a few years.

"It's not the mortgage that's the problem" said Christopher Thornberg, a principal with Beacon Economics in Los Angeles.

While the market was soaring, he said, homebuyers simply paid far too much for their homes and are now facing the consequences.

Economic Calender for 2 Des - 7 Des 2007

Sun Dec 2	5:30pm	AUD		Manufacturing PMI		53.8		53.3
	6:30pm	AUD		TDMI Inflation Gauge m/m		0.3%		0.3%
	6:50pm	JPY		Capital Spending q/q		-1.2%	-2.5%	-4.9%
	7:30pm	AUD		Trade Balance		-3.0B	-1.8B	-1.9B
	7:30pm	AUD		Company Gross Operating Profits q/q		-2.1%	1.9%	1.4%
	8:30pm	JPY		Average Cash Earnings y/y		0.0%	0.0%	-0.6%
Mon Dec 3	All Day	ALL		GCC Summit, Day 1
	3:30am	CHF		SVME PMI			59.5	60.7
	3:55am	EUR		German Manufacturing PMI			52.8	51.7
	4:00am	EUR		Manufacturing PMI (r)			52.6	52.6
	4:30am	GBP		Manufacturing PMI			52.5	52.9
	4:30am	EUR		ECB President Trichet Speaks
	5:00am	EUR		Unemployment Rate			7.3%	7.3%
	8:00am	USD		Boston Fed President Rosengren Speaks
	10:00am	USD		ISM Manufacturing Index			51.9	50.9
	10:00am	USD		ISM Manufacturing Prices			65.5	63.0
	10:30am	USD		Treasury Secretary Paulson Speaks
	Tentative	USD		Domestic Vehicle Sales			12.2M	12.2M
	6:50pm	JPY		Monetary Base y/y			0.7%	0.5%
	7:01pm	GBP		BRC Retail Sales Monitor y/y				1.0%
	7:30pm	AUD		Retail Sales m/m			0.6%	0.8%
	7:30pm	AUD		Building Approvals m/m			1.9%	6.8%
Tue Dec 4	All Day	ALL		GCC Summit, Day 2
	4:30am	GBP		Construction PMI			57.1	57.4
	5:00am	EUR		PPI m/m			0.4%	0.4%
	9:00am	CAD		Interest Rate Statement			4.50%	4.50%
	5:30pm	AUD		Interest Rate Statement			6.75%	6.75%
	5:30pm	AUD		Services PMI				53.2
	7:01pm	GBP		Consumer Confidence			94	98
	7:30pm	AUD		GDP q/q			1.0%	0.9%
Wed Dec 5	3:30am	EUR		ECB President Trichet Speaks
	3:55am	EUR		German Services PMI			53.5	55.1
	4:00am	EUR		Services PMI (r)			53.7	53.7
	4:30am	GBP		Services PMI			53.0	53.1
	5:00am	EUR		Retail Sales m/m			-0.2%	0.3%
	5:30am	GBP		BRC Shop Price Index y/y				1.1%
	Tentative	ALL		OPEC Press Conference
	8:15am	USD		ADP Nonfarm Employment Change			50K	106K
	8:30am	USD		Nonfarm Productivity q/q (r)			5.7%	4.9%
	8:30am	USD		Unit Labor Costs q/q (r)			-1.0%	-0.2%
	10:00am	USD		ISM Non-Manufacturing Index			55.0	55.8
	10:00am	USD		ISM Non-Manufacturing Prices			63.0	63.5
	10:00am	USD		Factory Orders m/m			0.1%	0.2%
	10:30am	USD		Crude Oil Inventories				-0.4M
	11:45am	USD		Treasury Secretary Paulson Speaks
	3:00pm	NZD		Interest Rate Statement			8.25%	8.25%
	3:30pm	CAD		BOC Advisor Carney Speaks
Thu Dec 6	12:00am	JPY		Leading Index m/m			20.0%	0.0%
	1:00am	JPY		Machine Tool Orders y/y				16.6%
	1:45am	CHF		Unemployment Rate			2.6%	2.6%
	4:30am	GBP		Industrial Production m/m			0.2%	-0.4%
	4:30am	GBP		Manufacturing Production m/m			0.2%	-0.6%
	6:00am	EUR		German Factory Orders m/m			0.9%	-2.5%
	7:00am	GBP		Interest Rate Statement			5.75%	5.75%
	7:45am	EUR		Interest Rate Announcement			4.00%	4.00%
	8:30am	USD		Unemployment Claims			335K	352K
	8:30am	CAD		Building Permits m/m			0.7%	-1.7%
	8:30am	EUR		ECB President Trichet Speaks
	10:00am	CAD		Ivey PMI			55.0	57.1
	11:00am	CAD		BOC Governor Dodge Speaks
	5:30pm	AUD		Construction PMI				57.4
	6:50pm	JPY		GDP q/q (r)			0.6%	0.6%
	6:50pm	JPY		GDP Deflator y/y (p)			-0.3%	-0.3%
	7:01pm	GBP		NIESR GDP Estimate				0.7%
Fri Dec 7	2:45am	EUR		French Government Budget Balance				-51.7B
	6:00am	EUR		German Industrial Production m/m			-0.4%	0.3%
	6:00am	EUR		Composite Leading Indicators m/m				98.3
	7:00am	CAD		Employment Change			8.0K	63.0K
	7:00am	CAD		Unemployment Rate			5.9%	5.8%
	8:30am	USD		Nonfarm Employment Change			75K	166K
	8:30am	USD		Unemployment Rate			4.8%	4.7%
	8:30am	USD		Average Hourly Earnings m/m			0.3%	0.2%
	10:00am	USD		Consumer Sentiment (p)			75.0	76.1
	12:00pm	EUR		ECB President Trichet Speaks
	3:00pm	USD		Consumer Credit m/m			6.0B	3.7B